EXECUTIVE SUMMARY

The 1996 welfare reform law was the most fundamental change in American social policy since the New Deal of 1935. The legislation addressed a wide range of social policies and programs including cash welfare, food stamps, child care, child support enforcement, welfare for noncitizens, disability benefits for children, and programs to reduce illegitimate births. The most fundamental reform was that welfare based on guaranteed permanent benefits for young parents who had children they could not support and who did not work was replaced by welfare that is time limited and provides benefits in exchange for work or work preparation. The 1996 reforms also featured the first major government attack on illegitimate births; these reforms included provisions on abstinence education, paternity establishment, child support enforcement, and cash bonuses for states that reduce their illegitimacy rates.

The results of the 1996 reforms have been remarkable. The welfare rolls have fallen by over half in the average state and most of the mothers leaving welfare have found jobs. As a result, employment by single mothers has increased rapidly to its highest level ever, thereby leading to the highest earnings by female-headed families ever recorded. More employment and higher earnings have in turn led to substantial reductions in child poverty, including the lowest rates ever for children in female-headed families and for black children. In addition, births to unmarried mothers have, for the first time in several generations, remained almost constant since enactment of welfare reform and the number of children living with both parents has increased slightly.

These felicitous results were produced by the combination of strong work requirements in welfare reform, government subsidies for low-income working families with children, and a strong economy. This new approach of requiring welfare mothers to work and then subsidizing their income through programs like the Earned Income Tax Credit is proving to be a much more effective way to promote individual responsibility, increase work levels, and reduce child poverty than the old system based on guaranteed benefits. As Congress takes up reauthorization of the welfare reform law, the most important goal should be to retain all the major provisions of the 1996 reforms. Congress should also take action to address several continuing or new problems; these include reducing illegitimacy, promoting marriage, helping low-income working parents qualify for better jobs, helping parents who are not working, and increasing the number of children living with their married parents. The private sector, especially faith-based organizations, should play a prominent role in solving these important social problems.

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Ron Haskins, Ph.D., is a senior fellow in the economic studies program at the Brookings Institution, where he also serves as co-director of the Welfare Reform and Beyond Project. He has written extensively on many topics, including daycare policy, illness and daycare, education policy, divorce and child support, federal expenditures on social programs, and federal budget and tax policy. He is also the co-editor of The New World of Welfare: An Agenda for Reauthorization and Beyond.